Canadian Money Forum banner

Mordko Money Diaries

11K views 49 replies 14 participants last post by  mordko 
#1 ·
About us:

- Mr and Mrs Mordko, in their late 40s.
- Mr Mordko's income: 150-200K
- Mrs Mordko's income: currently 0; might do charity and/or a bit of work going forward if she feels like it.

2 children, both been through this and that and rep hockey and all that comes with it; now at university (which costs less):
- Child A: finishing off his co-op; will be entering a postraduate programme next year. Should get CPA and stand on his own 2 feet by 2019.
- Child B: 3.5-4.5 years before graduation.

Housing:
- Currently renting; paid for by the client.
- Looking at re-entering the housing market in the next 12 months with a budget of 700K-1M.

Objectives:

- Buy a hobby farm and feed ourselves 100%
- Retire by the age of 55, once both kids are on their feet.

Assets:

- Investments in Canada: $970K. 100% shares, Couch Potato style portfolio.
- Investments in UK pension funds: $160K. Almost 100% shares, Couch Potato style portfolio.
- HISA: $800K (earmarked for the house)
- DB Pension (Mr Mordko) - no idea what the value is, but I would guess transfer value >$500K if I were to change jobs right now. Which I might.
- RESP (remaining balance): $40K.

Total assets: ~$2,470,000

- Other (not counted in the total worth):
a) a small DB pension from UK for Mrs Mordko from the age of 65
b) Small state UK and Canadian pensions for Mr and Mrs Mordko from the age of 67/65.
 
See less See more
#4 ·
Thanks. Yes, we are on track, which is nice.

My professional background is engineering/physics. I am from Russia; when I graduated it was still Perestroyka and Russia was popular, so a British company hired me. Started in a smallish company which has since been bought several times over, so now working for a large international corporation. Don't like it all that much; smaller is better. Early on I was looking after both winning and executing work as well as managing staff. That included a few high profile international projects and was fun. My salary grew quite fast. Lately it all kinda stalled; I think the more you enjoy your work, the faster your pay goes up.

My wife is also an engineer, she used to work part time. Then she got bored with office work + we needed a bit more freedom to keep 2 boys in rep hockey. She likes houses and working with people, so she became a realtor. We have just moved to a different area, so she is not working right now.

We were also quite lucky with our real estate - more than half of our net worth comes from owning and selling houses we lived in since 1995. The best deal was with our second house in the UK; it was purchased for 102K (pounds) with an 80K mortgage in 1998. It was sold for 240K (pounds) in 2004. The company asked me whether I would be interested in moving to a new division in Canada, so I did because there isn't much hockey in England. At that point the pound was worth 2.4CAD, so we cleared about $500K and bought a house in GTA for $780K in 2004 with a $360K mortgage. It has now been sold for $1.75M with a $90K mortgage.

Our stock investments have been relatively small - most of the spare cash went into kids's activities/education and mortgage repayments. What has been invested stayed within index mutual funds; more recently - ETFs. I have return data since 2002; stock investments are showing 8% annual return; although real return is obviously a bit lower; probably around 5-6%.

Everyone gets opportunities. Lucky people are the ones who grab them.
 
#5 ·
"At that point the pound was worth 2.4CAD, so we cleared about $500K and bought a house in GTA for $780K in 2004 with a $360K mortgage. It has now been sold for $1.75M with a $90K mortgage."

Very well done.

With your investments and pensions, you should be easily ready to retire at age 55. Especially with no debt and a $700k - $1M largely paid off home.
 
#8 ·
Thanks. We shall see what the future has in store... But we won't need a lot of money, most of our expenditure had to do with a) house b) kids and c) food during winter months. In summer and fall we have been feeding ourselves to some extent and only bought meat. Growing stuff small scale is kinda fun.

Still, one can never be sure about tomorrow.
 
#10 · (Edited)
That's true. On the other hand growing food, caring for chickens, etc... forces one to be active and extends the ability to continue doing so for longer. The method I use (square foot guardening) is comparatively light on ones physical abilities. Watering is done automatically via drip irrigation. Once the system is set up, planting and picking stuff for a single family isn't all that hard.
 
#11 ·
I appreciate your plan. My wife and I traded down in the last two years. Sold our acreage and moved to the lower mainland from Penticton. Retirement was 14 years of gardens, fruit trees, grapes, chickens and a few years of BnB. Loved it and miss it. Too much to handle now. Good luck with your green thumb and investments.
Cheers
Doc
 
#17 ·
Thanks Mordko Both kinds of luck here.
My last phase started ok but a cancer scare and major surgery over Christmas interrupted my plans. Think it will be ok now but we shall see. (All you guys make sure they get the finger at the docs regularly) When I am back on my feet and I will continue to metal detect. a lot of fun, especially when you find gold. :glee:
I was in policing in Vancouver and retired with the municipal pension. Together with the CPP and OAS for my wife and we have done ok. (should have kept the house in Van when we moved to the Okanagan...:mad2:My last house is worth 4M today plus.) Did ok in the OK though and bought a new car and nice Townhouse last year with money in our jeans.
Most posts include a long term situation. We won't be using any of our investments so that will probably be my question in my own soon post.
cheers and good luck again
Doc
 
#14 · (Edited)
Congrats mordko on your excellent situation.

It's funny though how much comes down to luck in the market. In the case of mordko's family, a huge portion of his gains and net worth came from real estate gains. At the time this was highly leveraged exposure to a single asset, and it worked out great.

That's lucky, but it could have gone the other way too. US homeowners leveraged into houses in 2005-2007 and were devastated, as were British and Spanish homeowners who entered in recent years.

mordko correct me if I'm wrong, but would this be an appropriate analogy to your history? Say we have an investor with 300K net worth, and he uses leverage to buy 500K of XIU. He buys early in a bull market and dramatically increases his net worth :) High leverage, one asset.
 
#16 ·
Exactly. We needed a family home in locations with great schools and the rest was down to a bit of luck. The place we had in the U.K. that went up by 2.4 times in 6 years was in an area which was looked down upon by the Brits when we bought but became very up market when we sold. We did feel the price went up a bit too fast and indeed 10 years later it sold for the same price even though it had conservatory added. Same thing happened with GTA as crazy Toronto prices spread outwards, the value skyrocketed. Incidentally, prices in the US have dropped very unevenly and the recovery has been uneven too. People who bought wisely got lucky.

Aside from the obvious that one needs a place to live and a home isn't really an investment like shares, there is another important difference with ETFs. When you sell them after a nice growth, you pay capital gains.
 
#18 ·
Also worth noting, that while we were leveraged, the mortgage payment was easily affordable at all times, and would have been even if the rates went up by a lot. And the rent on a family home in the burbs would have been a lot higher than interest and tax.

Where we got really lucky, was with our very first home. It was mortgaged with a building society, which was supposedly owned by its clients. When it privatized, they payed us. What are the chances of loan sharks paying you for borrowing from them?
 
#22 ·
At the end of January, I am 50% stock, 50% cash (the latter earmarked for buying a house).

The stock is invested in a worldwide CouchPotato as follows:

US - 35%, Canada - 30%, Developed outside N America - 20% (about half in the UK), EM - 15%.

Money-weighted returns on stocks, Jan 31 2017:

1 month -0.13%
3 months 2.06%
6 months 4.1%
YTD -0.13%
1 year 11.2%

January was flat; the indices went up but USD went down by almost 3%.
 
#23 ·
I am still roughly 50% stock, 50% cash (the latter earmarked for buying a house).

The stock is invested in a worldwide CouchPotato as follows:

US - 35%, Canada - 30%, Developed outside N America - 20% (about half in the UK), EM - 15%.

Money-weighted returns on stocks, Jan 31 2017:

1 month 3.4%
3 months 5.6%
6 months 9.5%
YTD 3.7%
1 year 19.9%
Since 2002 8.95%

Money-weighted return is significantly higher than time-weighted because the portfolio is dominated by the money placed in the portfolio in January and I was lucky with the timing. The returns are kinda meaningless for the same reason.

In February the US and EM investments have done real well while Canada and developed countries did OK but not great.
 
#24 ·
Also, I am expecting actuary's valuation of my DB pension which is about to be transferred to a DC pension, so there will be quite a bit more to invest in the next couple of months... And I am hoping to buy a house in the 700K range at some point over the next 2 months.
 
#25 ·
We bought a house and >30 acres of land for $1M. The cost is higher than hoped for but my dog did love the place very much. And it will be generating income while providing me with easy access to work (<20 minute drive).

By the time all of this is sorted, I expect the overall asset breakdown to look like this:

- $1M - house
- $1.5M - investment (including LIRAs, spousal RRSP, TFSA and taxable)
- $0 - debt, although we might use Line of Credit to fund investment projects, like roof-top solar power and the purchase of various agricultural toys.
 
#26 ·
Congrats ! That acreage especially is very fine. You say it is income producing ? Is it arable land you are going to lease out ?
My hope is to follow in your footsteps in a few years. I've already reduced work to a sort of semi-retired level and am going to milk that for a while but I can't wait to get out of the golden horseshoe and back into somewhere quieter. We'll probably stick with southern Ontario but definitely will be spending a lot less time here.
 
#27 ·
Thanks :) Part of the land is a wild forest + wetland and a pond, which my spaniel approves of. The other chunk is an established tree farm. We are planning to try and run it ourselves but will need a lot of education.

We did exactly what you are thinking about; got out of the overpopulated GTA but stayed within 1.5-2 hours of Toronto. Didn't end up quite as remote as I was considering, mainly because I am still working albeit for a different employer. My wife has effectively retired though. Guess I am targeting retirement (except for the hobby farm) in ~8 years when I hit 55 or so.

When you say "less time here" - are you thinking about Florida? That is fun but we'll probably get a few dogs and other animals... Besides, I kinda enjoy having different seasons.
 
#32 ·
Thanks :) Part of the land is a wild forest + wetland and a pond, which my spaniel approves of. The other chunk is an established tree farm. We are planning to try and run it ourselves but will need a lot of education.
We did exactly what you are thinking about; got out of the overpopulated GTA but stayed within 1.5-2 hours of Toronto. Didn't end up quite as remote as I was considering, mainly because I am still working albeit for a different employer. My wife has effectively retired though. Guess I am targeting retirement (except for the hobby farm) in ~8 years when I hit 55 or so.
When you say "less time here" - are you thinking about Florida? That is fun but we'll probably get a few dogs and other animals... Besides, I kinda enjoy having different seasons.
Very nice. Christmas tree farm ? Coming from a farming background, I can tell you that if are going to be claiming the property as agricultural, what you are really going to need is an education in farm taxes !

Ironically, we have also been looking in that same general area. My wife is originally from the London area and her father lived by the lake near St Thomas. She is also effectively retired (she works for our company one day a week). I'm thinking to sell the company and hang it up earlier than 8 years since I've had enough and we don't have any dependents to leave a legacy to. We bought a mortgage-less house in the Hamilton area a year and a half ago intending to stay a while and keep the company going but I am already itching to get out. lol

Probably not Florida but maybe California quite a bit every year (my wifes sister lives there). Probably also the UK every year as my family is getting elderly and a lot of them are in poor health. I to enjoy the seasons... except one of them... ha
 
#30 · (Edited)
@gibor,

- correct, we won't be taking a mortgage. After closing we will set up a line of credit and I will use it to fund certain projects, like solar power.

- it's not near London but in that general direction. Property taxes are just 3k a year, which is peanuts compared to the 12k we used to pay. They have been reduced substantially because of land use.

- soccer fields vary in size from 1 acre (50 by 100 yards) to 2.5 acres. This place is 365 by 365 meters which is a good size hobby farm but less than half of the total is usable for farming.

- trout is a good idea but the pond is more like a swimming pool right now, with a sandy beach. It's fed by a stream rather than by underground springs and probably gets too hot for trout. We will check the temperature in summer.
 
#31 ·
Right now I have just over 1M invested in shares. I also have a pension which is being evaluated by an actuary and will be commuted to a LIRA and a non reg fund. Trudeau will get his grabby hands on the 53 percent from the non reg portion which I consider nothing short of outrageous. I will only get 57 percent of the pension straight away, because almost half of it is unfunded and will be paid over 5 years.

To cut a long story short, 1.5M is my estimate of projected liquidity, taking into account the commuted value of the pension. Could be more or less, there is no way of knowing. Once it's paid out, I will allocate a portion of the total to fixed income. I am thinking of a 20 percent target but haven't quite decided.
 
#33 ·
Right, my wife has to travel to England every year, for the exact same reason. Sadly we don't have anyone in California, only some of my relations in Philadelphia and the place isn't great.

My son is an accountant, should get his CPA next year. I am just making sure he gets lots of diverse experience, with our foreign investments, farming taxes and everything else that comes with it... Should keep him busy. Thinking of hiring my other son as a farm hand for the summer, that would turn it into a real family business :)

Hope it's not winter you are disparaging. With all the cross country skiing and outdoors hockey opportunities, it has to be the most fun season of them all...
 
#34 · (Edited)
trout is a good idea but the pond is more like a swimming pool right now, with a sandy beach. It's fed by a stream rather than by underground springs and probably gets too hot for trout. We will check the temperature in summer.
then maybe perch, bass and cat fish?!

soccer fields vary in size
I meant a big one :)
Property taxes are just 3k a year
unexpectedly low..

To cut a long story short, 1.5M is my estimate of projected liquidity, taking into account the commuted value of the pension. Could be more or less, there is no way of knowing. Once it's paid out, I will allocate a portion of the total to fixed income. I am thinking of a 20 percent target but haven't quite decided.
we have about same value include everything, but I'm more conservative and have in Cash (HISA/GIC) close to 50%.

My son is an accountant, should get his CPA next year. I am just making sure he gets lots of diverse experience, with our foreign investments
My son gonna get businee/math degree next year and he practically have already job in capital market in big bank.... hopefully he will be able to help me with our investments :)

Right, my wife has to travel to England every year, for the exact same reason. Sadly we don't have anyone in California, only some of my relations in Philadelphia and the place isn't great.
about 10 years ago I was planning to do what you did :), now I'd prefer to travel more, so imho big house/land is a a big burden,
My brother lives in UK, just bought small house there, my wife's relatives live in Florida ....Should be visiting them more frequently, also planning to take long term vacation to warmer places, like Andalusia ....
 
#35 ·
We kinda travelled enough, I am tired of travelling. 10 years in England and my work have taken us through every country in Europe. I've been to some more exotic places with work. And kids sports have taken us across the US, at least the eastern half.

My brother in law retired in his 40s, they have money and never had kids. They have houses in Sweden, England and southern France and just keep moving around between golf courses and clubs. And he is a really nice, really bright guy but I can't fathom that way of life. Spending half of your adult life doing nothing except travelling? Somehow does not seem enticing.

So settling is quite alright. We will get a couple more dogs, maybe some ducks, geese and chickens and generating a bit of income out of a hobby farm seems like fun. I will carry on working in my regular job till I am 55 and then, depending on cash flow, we might just switch to hobby farming.
 
#36 ·
So settling is quite alright. We will get a couple more dogs, maybe some ducks, geese and chickens and generating a bit of income out of a hobby farm seems like fun.
If you like dogs, you also can become a breeder :) ... when you talking about "some ducks, geese and chickens " do you mean just for fun? or you want at some point kill them and eat them ?!
 
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.
Top